Ocado shares surge on Amazon takeover rumours
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There has been a lot of talk and rumors lately that Amazon or another American technology corporation might be interested in acquiring the online grocery service, Ocado. As a result, the value of Ocado's shares has significantly increased.
The Times' report, which caused a surge of over 40% in shares of the troubled company, was not commented on by Ocado or Amazon.
Their value increased by over 30%.
Throughout the pandemic, Ocado was highly regarded in the market and regarded as the UK's most valuable retailer, despite having only a small share of purchases.
However, people's opinions of the company have significantly worsened as it struggles to adapt to the comeback of in-person shopping and increased costs.
Its stock value has drastically dropped by approximately 80%, starting from its highest point in the year 2020.
Experts stated that the decrease in value might make the company a desirable candidate for acquisition.
In accordance with the takeover regulations in the United Kingdom, if a company is considering such actions, they must inform their investors of their intentions.
Amazon has been trying to grow its grocery business for a while now. They purchased Whole Foods and even tried to develop stores without cashiers. They also have a part ownership in Deliveroo, a popular UK restaurant delivery service. However, the UK government almost objected to the deal due to concerns about competition.
Andy Jassy, the CEO, mentioned in his yearly memo to investors in April that the grocery market is a tremendous potential for growth for the company. However, they are still exploring and searching for the most fitting approach. Jassy firmly believes that to become a significant player in the industry, they would need to expand their physical presence significantly.
Back in 2000, a trio of bankers from Goldman Sachs got together to create Ocado. A couple of years later, in 2002, Ocado began operating in collaboration with Waitrose.
At present, the retail arm of the company collaborates with Marks & Spencer and has approximately one million customers who are currently active (as of the conclusion of February). It holds about 12% of the online grocery market in the United Kingdom.
In addition to providing its services in the United Kingdom, the corporation has also provided its innovations to supermarkets worldwide. This includes selling to Krogers in the United States, Casino in France and Aeon in Japan.
The company announced a significant pre-tax loss of £500m in 2022. They attributed the negative financial outcome to a combination of factors including the cost-of-living crisis and the transition of customer behavior back to pre-lockdown patterns.
